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DaVita HealthCare Partners Settles Whistleblower Lawsuit for $495 Million

May 6, 2015

Denver-based DaVita HealthCare Partners has agreed to pay $495 million to settle a whistleblower lawsuit.

DaVita is accused of defrauding the federal Medicare program of millions of dollars. This is the third whistleblower lawsuit since 2012, and payments now approach $1 billion, the Denver Post reports.

This latest suit was filed in Atlanta in 2011 and involves a claim brought by a doctor and a nurse who worked for DaVita. According to legal documents, DaVita employees were throwing out useable medicines but DaVita was billing Medicare and Medicaid for them. The whistleblowers said in court filings that they questioned DaVita about the waste and they said the company submitted fraudulent claims between 2003 and 2010, according to the Post. DaVita Kidney Care CEO Javier Rodriguez said DaVita's 67,000 "teammates" in 11 countries "look forward to putting this behind us. We can now renew our focus on collaborating with regulators to avoid situations like this going forward." The settlement was announced in an April 15 Securities and Exchange Commission filing.

The case began with a lawsuit filed with the federal government in 2007. After a two-year investigation, the government decided not to join the lawsuit, the New York Times reported. The two employees filed their case again in 2011, under the federal False Claims Act. The False Claims Act dates back to the Civil War, and its provisions permit private parties to sue on behalf of the government for the submission of false claims for government funds. If the case succeeds, the whistleblower receives a share of recovered funds.

The lawsuit cited examples of inefficient use and waste of the DaVita drugs Zemplar, vitamin D, and Venofer, an iron supplement. If a patient needed 25 milligrams of Venofer, the physician would take 25 mg. from a 100-mg. vial, discard the rest, but bill Medicare for the full 100 mg. Or, to give an 8-mg. dose, a doctor might use a 10-mg. vial instead of four 2-mg. vials.

The Centers for Disease Control and Prevention (CDC) recommended against allowing multiple uses of the same vial in 2001, based on infection outbreaks caused by such use of the drug Epogen. But the CDC changed the policy and allowed re-entry use of vials of Epogen, Zemplar and Venofer if proper procedures were followed, the Post reports. But the lawsuit claims DaVita did not follow the changed policy and instead acted to "purposefully [to] maximize their waste and receive significantly higher reimbursements and revenue for Venofer and Zemplar usage."

Under the False Claims Act, penalties can be as high as $5,000 to $10,000 for each false claim. Every patient dose of one of the drugs counts as a claim. If DaVita had gone to trial and lost, the company would have to pay thousands of dollars per claim. Under the settlement, DaVita will pay the government $450 million and will reserve an additional $45 million to cover fees. The compensation to the two whistleblowers could amount to about $135 million.

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